The transaction, which has been recommended by the RAC II’s management team, has been unanimously approved by the RAC II Board and is expected to close in the second quarter of 2023, subject to certain closing conditions
NET Power agrees with Rice II for $1.4bn merger. (Credit: Patrick Hendry on Unsplash)
NET Power has signed a definitive agreement to merge with Rice Acquisition Corp. II, a special purpose acquisition company (SPAC), in a transaction valued at $1.45bn.
The SPAC merger will create a combined company, dubbed NET Power Inc., and its shares will be listed on the NYSE.
NET Power aims to advance the deployment of its unique technology to deliver clean, reliable, and low-cost power from natural gas.
Under the terms of the agreement, NET Power is expected to receive around $535m of cash net of transaction fees, assuming no redemptions.
The transaction includes $347m of cash, including $100m from the Rice family, and $225m of PIPE commitments from Occidental Petroleum, Constellation Energy, and 8 Rivers.
The deal, which has been recommended by the RAC II’s management team, has been unanimously approved by the RAC II Board.
It is expected to close in the second quarter of 2023, subject to certain closing conditions, including majority shareholders of the shares held by RAC II’s shareholders.
Upon closing of the transaction, RAC II director, and former Rice Energy CEO Danny Rice will be appointed as NET Power CEO, replacing Ron DeGregorio.
Danny Rice said: “Today, around 60% of global power generation comes from coal and natural gas-fired power plants that produce reliable and low-cost power.
“However, these plants collectively emit nearly 14 billion tonnes of CO2 per year, accounting for approximately 37% of total global emissions.”
DeGregorio said: “We have long believed that if you can use natural gas, generate reliable electricity, and capture the resulting emissions, you would change the world.
“For over a decade, NET Power has worked tirelessly to prove its game-changing technology, which we did through our demonstration facility in La Porte, Texas.”
NET Power will use the net proceeds of $200m secured through the committed investments to fully fund its corporate operations.
The company will use the funds to commercialise its first utility-scale plant (SN1) in the Permian Basin, Texas, which is expected to be commissioned in 2026.
In addition, Occidental is advancing feasibility studies to include NET Power plants in DAC hubs being developed by its 1PointFive subsidiary.
Occidental president and CEO Vicki Hollub said: “We are excited to support this transaction, which will further NET Power’s commercialisation plans and help achieve decarbonisation goals globally.
“We first invested in NET Power because we believe the technology can accelerate Oxy’s efforts to reduce emissions in our existing operations and ultimately supply emissions-free power to the Direct Air Capture (“DAC”) sites and sequestration hubs we are developing.”